Notes to Accounts of Oil And Natural Gas Corporation Ltd.

Mar 31, 2015

1. Corporate information

Oil and Natural Gas Corporation Limited ('ONGC' or 'the Company') is a
public limited company domiciled and incorporated in India. The
Company's shares are listed and traded on Stock Exchanges in India. The
Company is engaged in exploration, development and production of crude
oil and natural gas.

2. Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of
Rs. 5 per share. Each holder of equity shares is entitled to one vote
per share. The dividend proposed by the Board of Directors is subject
to the approval of the shareholders in the ensuing Annual General
Meeting.

In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.

3. Pursuant to the approval of the members dated 28.01.2011, during
the financial year 2010-11, one equity share having face value of Rs.
10/- each had been sub-divided into two equity shares of Rs. 5/- each
and bonus shares in proportion of one new equity bonus share of Rs. 5/-
each for every one fully paid up equity share of '5/- each held on

09.02.2011 (record date) had been allotted. The company has issued
total 4,277.75 million equity shares of face value of '5 each issued as
fully paid up by way of bonus shares during the period of five years
immediately preceding the reporting date.

4. Shares reserved for issue under option: Nil (previous year nil)

5. During the previous year 2013-14, PMT JV had downgraded reserves
for the Mid and South Tapti fields due to geological surprises. As a
result, the production profile is envisaged only up to 2015-16 and the
sale realization (net of operating expenses and statutory levies) is
being transferred to Site Restoration Fund pursuant to the Production
Sharing Contract. Under these circumstances, the field has been fully
depleted and depletion aggregating to Rs. 184.69 million (Previous year
Rs. 9,090.44 million) has been charged to the Statement of Profit and
Loss. Similarly, as at March 31, 2015, the provision for impairment of
Rs. 263.62 million (Previous year Rs. 441.87 million) representing the
net asset value and Capital Work in Progress in Tapti field has been
carried in the financial statements.

6. In respect of Ratna R series field, a producing field of the company,
MOPNG had during 1995-96, issued an award of the contract for
development of the field to a consortium of Essar Oil Limited and
Premier Oil limited consequent to which the company stopped production.
Pending the execution of the Production Sharing Contract, the company
continues to include Rs. 2,313.96 million in gross producing property
(including provision for abandonment of '891.74 million.) The said field
has been fully impaired and the net carrying amount as at March 31,2015
is Nil.

7. Other adjustment includes an amount of Rs. 4,196.00 million which
Government of India (GoI) vide letter dated 1st January, 2015, has
reimbursed as compensation for past costs incurred by ONGC in certain
discovered fields awarded to Joint Ventures/ Private Companies.
Accordingly an amount of Rs. 257.17 million has been adjusted against
the Net Carrying Amount of assets of Panna, Mukta, Tapti and Ravva
fields and balance amount of Rs. 3,938.83 million has been accounted
for as other income during the year.

8. Plant and Equipment includes an amount of Rs. 8,448.52 million
(Previous Year Rs. 8,436.64 million) in respect of Capital
Works in Progress (CWIP) for C2-C3 plant (including C3-C4 blending and
recycling facilities) which is mechanically complete and will be
capitalized on completion of test run.

9. During the Financial year 2004-05, the company had acquired 90%
Participating Interest in Exploration Block KG-DN-98/2 from M/s Cairn
Energy India Ltd. for a lump sum consideration of Rs. 3,711.22 million
which, together with subsequent exploratory drilling costs of wells had
been capitalised under exploratory wells in progress. During the
financial year 2012-13, the company had acquired the remaining 10%
participating interest in the block from M/s Cairn Energy India Ltd. on
actual past cost basis for a consideration of Rs. 2,124.44 million.
Initial in-place reserves have been established in this block and
adhering to original PSC time lines, a Declaration of Commercially (DoC)
with a conceptual cluster development plan was submitted on 21.12.2009
for Southern Discovery Area and on 15.07.2010 for Northern Discovery
Area. Thereafter, in the revised DoC submitted in December, 2013,
Cluster wise development of the Block had been envisaged by division of
entire development area into three clusters. The DoC in respect of
Cluster II has been reviewed by the Management Committee (MC) of the
block on 25.09.2014 and preparation of Field Development Plan (FDP) in
progress. The review of DOC in respect of Cluster I and Cluster III by
the MC is pending as on 31st March, 2015.

The exploration period of this block had been restructured by Government
up to 29.12.2013 in accordance with the Rig Holiday Policy and further
extended to 25.1.2014. Under the New Policy guidelines in this regard,
the Government has permitted the contractor to undertake appraisal
drilling, seismic API and related activities till submission of FDP
which is currently underway and drilling of two appraisal wells is in
progress. Pending approval of FDP by the MC in respect of Cluster II and
review of DoC by the MC in respect of Cluster I and III, as a matter of
abundant caution, the company has retained the provision of Rs.17,216.18
million (Previous Year Rs. 17,210.82 million) towards acquisition costs
and cost of exploratory wells.

10. With effect from 28th February, 2015, ONGC Mangalore
Petrochemicals Limited has become subsidiary (previous year Joint
venture) of ONGC on account of direct holding of 48.99% (previous year
46%) and indirect holding of 51.00% (previous year 3%) stake through
subsidiary company MRPL.

11. The Company is restrained from diluting the investment in the
respective companies till the sponsored loans are fully repaid as per
the covenants in the loan agreements.

12. Shares of Oil Spill response limited valued at GBP one each at the
time of issuance. Total value in INR at the time of issuance of shares
was Rs. 6,885/-.

14. Loans and advances to employees include an amount of Rs. 0.24
million (Previous Year Rs. 0.37 million) outstanding from Key
Managerial Personnel.

15. In Ravva Joint Venture, the demand towards additional profit
petroleum raised by Government of India (GoI), due to differences in
interpretation of the provisions of the Production Sharing Contract
(PSC) in respect of computation of Post Tax Rate of Return (PTRR),
based on the decision of the Malaysian High Court setting aside an
earlier arbitral tribunal award in favour of operator, was disputed by
the operator M/s Cairn India Ltd. The company is not a party to the
dispute but has agreed to abide by the decision applicable to the
operator. The company had made a provision towards the claim made by
the GoI in earlier years and the amount of provision outstanding as on
31th Mar, 2015 is Rs. 10,513.79 million (equivalent to USD 167.84
million) after adjustments for interest and exchange rate fluctuations.
The GoI had recovered the above amount [including interest thereon USD
54.88 million (Rs. 3437.68 million)] from the company in earlier years
which has been carried as recoverable under Long Term Loans and
advances in the Balance Sheet as at 31st March, 2015.

In subsequent legal proceedings, the Appellate Authority of the
Honourable Malaysian High Court of Kuala Lumpur had set aside the
decision of the Malaysian High Court and the earlier decision of
arbitral tribunal in favour of operator was restored, against which the
GoI has preferred an appeal before the Federal Court of Malaysia. The
Federal Court of Malaysia, vide its order dated 11th October, 2011, has
dismissed the said appeal of the GoI.

The company has taken up the matter regarding refund of the recoveries
made in view of the favorable judgment of the Federal Court of Malaysia
with MoP&NG. However, according to a communication dated 13th January,
2012 received, MoP&NG expressed the view that ONGC's proposal would be
examined when the issue of ONGC carry under Ravva PSC is decided in its
entirety by the Government along with other partners.

In view of the perceived uncertainties in obtaining the refund at this
stage, the provision made in the books as above has been retained and
netted off against the amount recoverable as above in the financial
statements for the year ending 31st Mar 2015. (Figures in INR are
reinstated).

16. During the financial year 2010-11, the Oil Marketing Companies,
nominees of the GoI recovered USD 32.07 million (Rs. 2,009.02 million)
ONGC's share as per directives of GoI in respect of Jointly Controlled
Assets-Panna Mukta and Tapti. The recovery is towards certain
observations raised by auditors appointed by the Director General of
Hydrocarbons (DGH) under Production Sharing Contract (PSC) for the
period 2002-03 to 2005-06 in respect of cost and profit petroleum share
payable to GoI. BGEPIL along with RIL ("Claimants") have served a
notice of arbitration on the GoI in respect of dispute, differences and
claims arisen in connection with the term of Panna, Mukta and Tapti
PSCs. Since the company is not a party to the arbitration proceedings,
it had requested MoP&NG that in case of an arbitral award the same be
made applicable to ONGC also, as a constituent of contractor for both
the PSCs. Subsequently, vide letter dated July 4, 2011 MoP&NG has
advised ONGC not to participate in the arbitration initiated by RIL and
BGEPIL under Panna Mukta and Tapti PSCs. MoP&NG has also stated that in
case of an arbitral award, the same will be applicable to ONGC also as
a constituent of the contractor for both the PSCs. Pending final
arbitral award, the same has been shown as Receivable from GoI under
Advance Recoverable in Cash or Kind or Value to be Received' under Long
Term Loans and Advances. (Figures in INR are reinstated).

17. Deposit under Site Restoration Fund Scheme:

A sum of Rs. 125,443.80 million till 31.03.2015 (previous year
'113,101.59 million) has been deposited with banks under section 33ABA
of the Income Tax Act, 1961 and can be withdrawn only for the purposes
specified in the Scheme i.e. towards removal of equipments and
installations in a manner agreed with Central Government pursuant to an
abandonment plan to prevent hazards to life, property, environment etc.
This amount is considered as restricted cash and hence not considered
as 'cash and cash equivalents'.

18. The deposits maintained by the company with banks comprise time
deposit, which can be withdrawn by the company at any point without
prior notice or penalty on the principal.

19. Amount deposited in unclaimed dividend account is earmarked for
payment of dividend and cannot be used for any other purpose.

20. Includes Rs. 21,067.60 million (Previous year Rs. 2,092.23
million) towards differential royalty being deposited from 1st
February, 2014 as per the interim order of the Hon'ble Supreme Court of
India. (also refer Note no. 44.1.1.b)

21. Includes an amount of Rs. 0.13 million (Previous Year Rs. 0.13
million) outstanding from Key Managerial Personnel.

22. In terms of the decision of Government of India (GOI), the company
has shared Rs. 362,996.20 million (Previous Year Rs. 563,842.85
million) towards under-recoveries of Oil Marketing Companies (OMCs) on
price sensitive products viz. Diesel (till 18th October'14), Domestic
LPG and PDS Kerosene for the year 2014-15 (Nil in 4th quarter of FY
2014-15 as per GoI directives) by extending the discount in the prices
of Crude Oil, Domestic lPg and PDS Kerosene based on the rates of
discount communicated by Petroleum Planning and Analysis Cell (PPAC)
and Ministry of Petroleum and Natural Gas (MoP&NG). The impact of
discount is as under:

23. For Crude Oil produced in Assam, sales revenue is based on the
pricing formula provided by MoP&NG. Revenue from rest of nominated
crude is accounted in terms of Crude Oil Sales Agreements (COSAs)
already signed and made effective from 1st April, 2010.

24. During the previous year, based on the directives issued by MoP&NG
and Petroleum Planning and Analysis Cell (PPAC) vide letters dated 31st
May, 2012 and 1st June, 2012 respectively, w.e.f. 1st April, 2012,
refineries started making deductions from ONGC payments towards Octroi/
VAT/ CST on discounts allowed by ONGC to refineries on supplies of
crude oil. Total deduction made by refineries on this account from 1st
April, 2012 to 30th September, 2013 amounting to Rs. 25,032.60 million
(includes Rs. 15,846.70 million for the year 2012-13) was provided for.
The company had revised the sales revenue and corresponding statutory
levies w.e.f. 1st April 2012 onwards, considering deductions made by
refineries based on MoP&NG directives. Aforesaid provision made by the
Company till 30th September, 2013 had also been written back.

25. Recognition of revenue on account of Short Lifted Gas amounting to
Rs. 1,774.13 million (Previous Year Rs. 1,253.74 million) has been
postponed. This will be recognized when there is reasonable certainty
regarding ultimate collection as per the policy of the company.

26. Sales revenue of Natural Gas is based on gas price fixed by GoI from
time to time. Till October'14, sales revenue is based on MoP&NG order
dated 31st May'10 wherein effective from 1st June'10, the price of APM
gas produced by NOCs was fixed at US$ 4.2/mmbtu less royalty (on NCV
basis). On 25th October'14, GoI notified "New Domestic Natural Gas
Pricing Guidelines, 2014" applicable from 1st November'14. Under said
guidelines, price of domestic gas produced in India during 1st
November'14 to 31st March'15 has been fixed as US$ 5.05/mmbtu (on GCV
basis). For gas consumers in North-East, consumer price is 60% of the
producer price and the difference between producer price and consumer
price is paid to the company through GoI Budget and shown as 'North-East
Gas Subsidy'.

27. The company is supplying majority of Natural gas to Gas Authority
of India Limited (GAIL) which also purchases gas from other sources and
sells to APM and non-APM consumers. Based on the Government directives,
excess in Gas Pool Account at the end of financial year is transferred
to ONGC/ OIL in accordance with their contribution. Based on the
details received from GAIL, an amount of Rs. 2,292.30 million (Previous
year Rs. 3,508.10 million) for Gas Pool Receipts for the current year
and Rs. 974.74 million (Previous year Rs. 212.37 million) on account of
interest on Gas Pool Account has been considered as 'Surplus from Gas
Pool Account'.

28. Excise duty on sale of product has been deducted from Sales
revenue and Excise duty shown above represents the difference between
Excise duty on opening and closing stock of finished goods.

29. During the year, Government has directed the company to make
following payments/adjustments towards differential royalty at uniform
rate of discount for the period 2008-09 to 2013-14 to the State and
Central Government:

31. Brief Description: A general description of the type of Employee
Benefits Plans is as follows:

32.All the employee benefit plans of the Company are run as Group
administration plans (Single Employer Scheme) including employees
seconded to ONGC Videsh Limited (OVL), 100% subsidiary.

33. Earned Leave (EL) Benefit

Accrual - 30 days per year

Encashment while in service - 75% of Earned Leave balance subject to a
maximum of 90 days per calendar year

Encashment on retirement - maximum 300 days

34. Good Health Reward (Half pay leave)

Accrual - 20 days per year

Encashment while in service - Nil

Encashment on retirement - 50% of Half Pay Leave balance.

35. Gratuity

15 days salary for each completed year of service. Vesting period is 5
years and the payment is restricted to Rs. 1.00 million.

36. Post-Retirement Medical Benefits

Upon payment of one time prescribed contribution by the employees, full
medical benefits on superannuation and on voluntary retirement subject
to the completion of minimum 20 years of service and 50 years of age.

37. Terminal Benefits

a. At the time of superannuation, employees are entitled to settle at
a place of their choice and they are eligible for Transfer Travelling
Allowance.

b. Employees are gifted gold coins on retirement up to 31.01.2015,
depending upon their level and years of service. This scheme has been
discontinued w.e.f. 27.02.2015. Accordingly Rs. 5,854.33 million
provided in earlier years has been written back (Note 7 & 11).
Re-measured figures are restated accordingly in note no. 37.3 and 37.5.

38. The amounts included in the fair value of plan assets of gratuity
fund in respect of Reporting Enterprise's own financial instruments and
any property occupied by, or other assets used by the reporting
enterprise are Nil (Previous Year Nil)

The discount rate is based upon the market yield available on
Government bonds at the Accounting date with a term that matches. The
salary growth rate takes account of inflation, seniority, promotion and
other relevant factor on long term basis. Expected rate of return on
plan assets is based on market expectation, at the beginning of the
year, for return over the entire life of the related obligation.

39. Disclosure under Accounting Standard -17 on "Segment Reporting"

The segment information is presented under the Notes to the
Consolidated Financial Statements as required under the standard.

40. Disclosure under Accounting Standard -18 on "Related Party
Disclosure":

40.1 Name of related parties and description of relationship:

Jointly Controlled Entity

i. Petronet LNG Limited

ii. ONGC Teri Biotech Limited

iii. Mangalore SEZ Limited

iv. ONGC Petro-additions Limited

v. ONGC Tripura Power Co. Limited

vi. Dahej SEZ Limited

vii. ONGC Mangalore Petrochemicals Limited (up to 28.02.2015)

40.2 Key Managerial Personnel:

i) Shri D K Sarraf, Chairman and Managing Director

ii) Shri A K Banerjee, Director (Finance) up to 30.04.2015

iii) Shri T K Sengupta, Director (Offshore)

iv) Shri Ashok Verma, Director (Onshore) from 19.06.2014

v) Shri D D Misra, Director (Hr) from 01.08.2014

vi) Shri A K Dwivedi, Director (Exploration) from 16.03.2015

vii) Shri Shashi Shanker, Director (T&FS)

viii) Shri N K Verma, Director (Exploration) up to 26.08.2014

ix) Shri K.S Jamestin, Director (HR) up to 31.07.2014

x) Shri N K Sinha, Company Secretary

41. Disclosure under Accounting Standard - 19 on 'Leases'

The company has certain office/residential premises on Operating Lease
which are cancellable by giving appropriate notice as per the
respective agreements. During the year Rs. 977.22 million (Previous
year Rs. 934.64 million) had been paid towards cancellable Operating
Lease.

42. The financial statements of 117 (previous year 124) out of 134
(previous year 135) JVs/NELP blocks have been incorporated in the
accounts to the extent of Company's participating interest in assets,
liabilities, income, expenditure and profit / (loss) before tax on the
basis of statements certified in accordance with production sharing
contract and in respect of balance 17 (previous year 11) JVs/NELP
blocks, the figures have been incorporated on the basis of uncertified
statements prepared under the production sharing contracts. Both the
figures have been adjusted for changes as per Note No. 2.j.1 The
financial positions of JV/NELP are as under:

43. As per the Production Sharing Contracts signed by the Company
with the Gol, the Company is required to complete Minimum Work
Programme (MP) within stipulated time. In case of delay in completion
of the MWP, Liquidated Damages (LD) is payable for extension of time to
complete MWP Further, in case the Company does not complete MWP or
surrenders the block without completing the MP, the estimated cost of
completing balance work programme is required to be paid to the Gol.
During the year LD amounting to (net of reversal) Rs. 24.08 million
(Previous year Rs. 245.65 million) and cost of unfinished MWP (net of
reversal) Rs. 1,420.64 million (Previous year (net of reversal) Rs. (-)
59.14 million), paid/payable to the Gol is included in survey and wells
written off expenditure respectively.

44. In respect of 3 NELP blocks (previous year 12) which have
expired as on 31st March, 2015, the Company's share of Unfinished
Minimum Work Programme (MWP) amounting to '820.40 million (previous
year to Rs. 18,014.12 million) has not been provided for since the
company has already applied for further extension of period in these
blocks as 'excusable delay'/special dispensations citing technical
complexities, within the extension policy of NELP Blocks, which are
under active consideration of GoI. The delays have occurred generally
on account of pending statutory clearances from various Govt.
authorities like Ministry of Defense, Ministry of Commerce,
environmental clearances, State Govt. permissions etc. The above MWP
amount of '820.40 million (previous year Rs. 18,014.12 million) is
included in MWP commitment under note no. 44.1.6.

45. The company has relinquished 30% Participating Interest (PI) in
SGL Field with future interest in block RJ-ON/6 Jaisalmer Basin
Rajasthan to Focus Energy Ltd (Operator), on condition that Focus
Energy Ltd (Operator) to pay towards 100% past royalty obligation,
PEL/ML fees, other statutory levies and waive off development/
Production costs payable by OnGc in SGL Field of the block as well as
take all future 100% royalty obligation of ONGC as licensee and also
not exercise its option of acquiring 30% PI in two gas discoveries
namely SSG-1 and SSF-2 in Block. Pending farm out agreement/ government
approval, no adjustment is made in the accounts in respect of
relinquishment of RJ-ON/6.

46. Disclosure under Accounting Standard - 28 and Guidance note on
Accounting for Oil and gas producing Activities (Revised) on
"Impairment of Assets"

47. The Company is engaged mainly in the business of oil and gas
exploration and production in On-shore and Offshore. In case of onshore
assets, the fields are using common production/transportation
facilities and are sufficiently economically interdependent to
constitute a single cash generating unit (CGU). Accordingly, impairment
test of all onshore fields are performed in aggregate of all those
fields at the Asset Level. In case of Offshore Assets, a field is
generally considered as CGU except for fields which are developed as a
Cluster, for which common facilities are used, in which case the
impairment testing is performed in aggregate for all the fields
included in the cluster.

48. The Value in Use of producing/developing CGUs is determined under
a multi-stage approach, wherein future cash flows are initially
estimated based on Proved Developed Reserves. Under circumstances where
the further development of the fields in the CGUs is under progress and
where the carrying value of the CGUs is not likely to be recovered
through exploitation of proved developed reserves alone, the Proved and
probable reserves (2P) of the CGUs are also taken for the purpose of
estimating future cash flows. In such cases, full estimate of the
expected cost of evaluation/development is also considered while
determining the value in use.

49. In assessing value in use, the estimated future cash flows from the
continuing use of the assets and from its disposal at the end of its
useful life are discounted to their present value. The present values of
cash flows are determined by applying discount rates of 19.71% (previous
year 19.10 %) for Rupee transactions and 13.89% (previous year 13.00 %)
for crude oil and value added products revenue, which are measured in
USD. Future cash inflows from sale of crude oil and value added products
are computed using the future prices, on the basis of market-based
average prices of the Dated Brent crude oil as per assessment by
'Platt's Crude Oil Market wire' and its co-relations with benchmark
crudes and other petroleum products. Future cash flows from sale of
natural gas is also computed based on the expected future prices on the
basis of the notification issued by the Government of India and
discounted applying the rate applicable to the cash flows measured in
USD in view of the new pricing guidelines issued by GoI. (refer note
no.26.5)

50. During the year Rs. 2,136.53 million (Previous Year Rs. 1,025.48
million) is provided as impairment loss. Out of this, an amount of Rs.
380.89 million (Previous Year Rs. 355.97 million) has been provided as
additional impairment in respect of onshore CGUs - Jodhpur and Silchar.
Rs. 146.40 million (Previous Year Rs. 69.05 million) has been provided
for already impaired offshore CGU- Ratna. For B 121 an amount of '49.73
million (Previous Year '20.09 million) has been provided as additional
impairment. In addition, Rs. 367.91 million (Previous Year Rs. 30.42
million) pertaining to block CY-OS- 90/1 (PY-3) has been provided as
presently the field does not have any potential to produce. An amount
of Rs. 1,025.81 million (Previous Year Rs. 79.40 million) mainly
represents additional impairment charge in respect of certain onshore
Pre- NELP joint venture blocks (RJ ON 6, CB ON 2 and CB ON 3) due to
adjustment of cost recovery from revenue and sharing of 100% royalty.
Balance amount of Rs. 73.38 million, Rs. 91.14 million (previous year
Rs. 15.90 million) and Rs. 1.27 million has been provided for
Ankleswar, Hazira Plant and Retail Trading respectively.

51. Further, Rs. 201.88 million (Previous Year Rs. 806.08 million)
impairment losses has been reversed because of decrease in Abandonment
cost estimation in respect Offshore CGU D-18 and Tapti.

52. Impairment testing of assets under exploratory phase (Exploratory
Wells in Progress) has been carried out as on 31.03.2015, and an amount
of Rs. 1,172.15 million (Previous year Rs. 2,546.46 million) has been
provided during the year 2014-15 as impairment loss. Further, Rs.
1,203.23 million (Previous Year Nil) impairment loss has been reversed
in the Statement of Profit and Loss as exploratory phase assets have
been transferred to producing properties.

a. The Company's pending litigations comprise of claims against the
Company and proceedings pending with Tax/Statutory/Government
Authorities. The Company has reviewed all its pending litigations and
proceedings and has made adequate provisions, wherever required and
disclosed the contingent liabilities, wherever applicable, in its
financial statements. The Company does not expect the outcome of these
proceedings to have a material impact on its financial position. Future
cash outflows in respect of the above are determinable only on receipt
of judgments/decisions pending with various forums/ authorities.

b. In terms of the statutory provisions of Oilfields (Regulation and
Development) Act, 1948 (ORDA), Petroleum & Natural Gas (PNG) Rules 1959
and Notifications issued thereunder; the Company is liable to pay
royalty to Central Government (GoI) and State Governments, on production
of Crude Oil and Natural Gas from offshore fields and onshore fields,
respectively. Since 2008-09, the Company has been paying royalty on
crude oil at realized price which is net of under-recovery of the OMCs
shared by the Company as per GoI directives. On an application filed by
the State of Gujarat, the Hon'ble High Court of Gujarat in its order
dated 30.11.2013 has directed the Company to pay the shortfall of
royalty on crude oil produced from the onshore fields in the State of
Gujarat on pre-discount prices from 01.04.2008 onwards. Based on the
Special Leave Petition filed by the Company against the said order of
the Hon'ble High Court of Gujarat, pending further orders, Hon'ble
Supreme Court vide order dated 13.02.2014 stayed the operation of the
impugned judgment subject to the condition that the company pays royalty
to the State of Gujarat on pre-discounted price of crude oil w.e.f.
01.02.2014 onwards. Accordingly, differential amount of Rs. 117,242.00
million (reduced to the extent Rs. 16,440.00 million which is paid to
Gujarat Govt.- refer Note No. 31.2) on this account for the period from
April, 2008 to March, 2015 C116,326.96 million as on 31.03.2014) has
been considered as Contingent Liability. Pending the final outcome of
the SLP filed before the Hon'ble Supreme Court, differential royalty
(royalty on pre-discount price minus royalty on post-discount price)
amounting to Rs. 21,067.60 million deposited w.e.f. February, 2014
C2,092.23 million as on 31.03.2014) in terms of Hon'ble Supreme Court
order has been shown as deposit.

56. Corporate Guarantees executed by the Company on behalf of its
wholly owned subsidiary, ONGC Videsh Limited (OVL):

60. The Company has given an undertaking to The State Bank of India,
for a Rupee term loan agreement amounting to Rs. 30,350 million
(previous year Rs. 30,350 million) in respect of ONGC Tripura Power Co.
Limited (OTPC) for not to dilute the shareholding till two years after
Commercial Operation Date (COD) of the project and to bear any cost
overrun to the extent of 10% of the estimated project cost of Rs.
40,470 million.

61. The year-end reserves of the company have been estimated by the
Reserves Estimation Committee (REC) which follows international
reservoir engineering procedures consistently. The company has adopted
deterministic approach for reserves estimation and is following Society
of Petroleum Engineers (SPE) - 1997 guidelines which defines reserves as
"estimated volumes of crude oils, condensate, natural gas, natural gas
liquids and associated substances anticipated to be commercially
recoverable from known accumulations from a given date forward, under
existing economic conditions, by established operating practices, and
under current Government regulations." Volumetric estimation is the main
procedure in estimation, which uses reservoir rock and fluid properties
to calculate hydrocarbons in-place and then estimate that portion which
will be recovered from it. As the field gets matured with reasonably
good production history is available then performance method such as
material balance, simulation, decline curve analysis are applied to get
more accurate assessments of reserves.

The Company uses the services of third party agencies for due diligence
and it gets the reserves of its assets audited by third party
periodically by internationally reputed consultants who adopt latest
industry practices for their evaluation.

The annual revision of estimates is based on the yearly exploratory and
development activities and results thereof. New in- place Volume and
Ultimate Reserves are estimated for new field discoveries or new pool
discoveries in already discovered fields. Also, appraisal activities
lead to revision in estimates due to new subsurface data. Similarly,
reinterpretation exercise is also carried out for old fields due to
necessity of revision in petro-physical parameters, updating of static
and dynamic models and performance analysis leading to change in
reserves. Intervention of new technology, change in classifications and
contractual provisions also necessitates revision in estimation of
reserves.

62. The Company has a system of physical verification of Inventory,
Fixed Assets and Capital Stores in a phased manner to cover all items
over a period of three years. Adjustment of differences, if any, is
carried out on completion of reconciliation.

63. Discrepancies of crude oil of 96,496 MT (valued at Rs. 395.47
million as on March 31,2014) between physical and book records at
Ankleshwar Asset have been ascertained by the management during the
year and accordingly these have been written off/adjusted in
inventories. Further, 70,746 MT of pit oil lying in book of Ahmedabad
Asset (valued at nil as on March 31,2014) has also been written off
during the year. These write offs and consequential adjustments thereto
have been made on account of over reporting of crude oil production in
earlier financial years. The discrepancies as mentioned above are
under investigation by the appropriate authorities.

64. The Company did not have any long term contracts including
derivative contracts for which there were any material foreseeable
losses.

65. Some balances of Trade/Other Receivables, Trade/Other Payables and
Loans and Advances are subject to confirmation/reconciliation.
Adjustments, if any, will be accounted for on
confirmation/reconciliation of the same, which will not have a material
impact.

66. Previous year's figures have been regrouped/reclassified, wherever
necessary, to conform to current year's classification.

67. Figures in parenthesis as given in these Notes to Financial
Statement relate to previous year.

Mar 31, 2013

1. Corporate information

Oil and Natural Gas Corporation Limited (''ONGC'' or ''the Company'') is a
public limited company domiciled in India and incorporated under the
provisions of Companies Act, 1956. Its Shares are listed and traded on
Stock exchanges in India. The Company is engaged in exploration,
development and production of crude oil and natural gas.

2.1 Subsequent to the date of balance sheet, ONGC Petro-addition
Limited has allotted equity shares against the advance for equity of
Rs. 3,328.69 million.

2.2 Loans and advances to employees include an amount ofRs.0.50
million (Previous YearRs.0.11 million) outstanding from whole time
directors.

2.3 In Rawa Joint Venture, the demand towards additional profit
petroleum raised by the Government of India (Gol), due to differences
in interpretation of the provisions of the Production Sharing Contract
(PSC) in respect of computation of Post Tax Rate of Return (PTRR),
based on the decision of the Malaysian High Court setting aside an
earlier arbitral tribunal award in favour of operator, was disputed by
the operator M/s Cairn Energy India Pty Ltd. The company is not a party
to the dispute but has agreed to abide by the decision applicable to
the operator. The company had made a provision towards the claim made
by the Gol in earlieryears and the amount of provision outstanding as
on 31st March, 2013 isRs.9,129.07 million (equivalenttoUSD 167.84
million) after adjustments for interest and exchange rate fluctuations.
The Gol had recovered the above amount [including interest thereon USD
54.88 million (Rs. 2,984.92 million)] from the company in earlier years
which has been carried as recoverable under Long Term Loans and
advances in the Balance Sheet as at 31 st March, 2013.

In subsequent legal proceedings, the Appel late Authority of the
Honorable Malaysian High Court of Kuala Lumpur had set aside the
decision of the Malaysian High Court and the earlier decision of
arbitral tribunal in favour of operator was restored, against which the
Gol had preferred an appeal before the Federal Court of Malaysia. The
Federal Court of Malaysia, vide its order dated 11 th October, 2011,
had dismissed the said appeal of the Gol.

The company has taken up the matter regarding refund of the recoveries
made in view of the favourable judgment of the Federal Court of
Malaysia with MoP&NG. However, according to a communication dated 13th
January 2012 received, MoP&NG expressed the view that ONGC''s proposal
would be examined when the issues of ONGC carry under Rawa PSC is
decided in its entirety by the Government along with other partners.

In view of the perceived uncertainties in obtaining the refund at this
stage, the provision made in the books as above has been retained and
netted off against the amount recoverable as above in the financial
statements for the year ended 31 st March, 2013.

3. Deposit under Site Restoration Fund Scheme:

Asum ofRs. 101,331.21 million till 31.03.2013 (previous yearRs.
91,825.72 million) has been deposited with banks under section 33ABAof
the Income TaxAct, 1961 and can be withdrawn only for the purposes
specified in the Scheme i.e. towards removal of equipments and
installations in a manner agreed with Central Government pursuant to an
abandonment plan to prevent hazards to life, property, environment etc.
This amount is considered as restricted cash and hence not considered
as ''cash and cash equivalents''.

4.1 This includes an amount of Rs. 0.56 million (previous yearRs. 0.56
million) in respect of Carbon Credits.

5.1 The deposits maintained by the company with banks comprise time
deposit, which can be withdrawn by the company at any point without
prior notice or penalty on the principal. Fixed deposits ofRs. Nil
(Previous yearRs.52,380.00 million) has been pledged to Banksagainst
Short term loan taken from Banks.

5.2 Amount deposited in unclaimed dividend account is earmarked for
payment of dividend and cannot be used for any other purpose.

6.1 Loans and advances to employees include an amount ofRs. 0.39
million (Previous YearRs. 0.24 million) outstanding from whole time
directors.

6.2 During the financial year 2010-11, the Oil Marketing Companies,
nominees of the Gol recovered USD 32.07 million (Rs. 1,744.29 million),
ONGC''s share as per directives of Gol in respect of Jointly Controlled
Assets - Panna, Mukta & Tapti. The recovery is towards certain
observations raised by auditors appointed by the Director General of
Hydrocarbons (DGH) under Production Sharing Contract (PSC) for the
period 2002-03 to 2005-06 in respect of cost and profit petroleum share
payable to Gol. BGEPIL along with RIL ("Claimants") have served a
notice of arbitration on the Gol in respect of dispute, differences and
claims arisen in connection with the term of Panna, Mukta & Tapti
PSC''s. Since the company is not a party to the arbitration proceedings,
it had requested MoP&NG that in case of an arbitral award, the same be
made applicable to ONGC also, as a constituent of contractor for both
the PSC''s. Subsequently, vide letter dated July 4,2011 MoP&NG has
advised ONGC not to participate in the arbitration initiated by RIL &
BGEPIL under Panna, Mukta & Tapti PSC''s. MoP&NG has also stated that in
case of an arbitral award, the same will be applicable to ONGC also as
a constituent of the contractor for both the PSC''s. Pending final
arbitral award, the same has been shown as Receivable from Gol under
''Advance Recoverable in Cash or in kind orfor value to be received''.

7.1 Crude Oil Sales Agreements (COSA) with Indian Oil Corporation
Limited (IOC) has been signed on 20th September, 2012. Since the
COSAis made effective from 1st April, 2010, necessary adjustments
amounting to Rs. 7,289.50 million (inclusive of VAT Rs.306.54 million)
for 2010-11 and 2011-12 considering revised crude prices for supplies
made to IOC for the period from IstApril, 2010 to 31 st March, 2012
have been made in books of accounts during 2012-13, by way of issue of
credit notes.

7.2 COSA with Chennai Petroleum Corporation Limited (CPCL) has been
signed on 15th May, 2013. Since the COSA is made effective from
IstApril, 2010, necessary adjustments amounting toRs. 171.03 million
(inclusive of VATRs. 11.97 million) for 2010-11 and 2011 -12
considering revised crude prices for supplies made to CPCLfor the
period from 1 st April, 2010 to 31 st March, 2012 have been made in
books of accounts during 2012-13, by way of issue of credit notes.

7.3 COSA with Bharat Petroleum Corporation Limited (BPCL) and
Hindustan Petroleum Corporation Limited HPCL was signed and implemented
during 2011-12. Sales revenue in respect of crude Oil supplied to
Mangalore Refinery and Petrochemicals Limited (MRPL) is based on the
pricing formula agreed with the refinery in terms of erstwhile Moll.
For Crude Oil produced in Assam, sales revenue is based on the pricing
formula provided by MoP&NG.

7.4 Based on the directives issued by MoP&NG and Petroleum Planning
and Analysis Cell (PPAC) vide letters dated 31st May, 2012 and 1st
June, 2012 respectively, w.e.f. 1 April, 2012, refineries started
making deductions from ONGC payments towards Octroi/VAT/CST on
discounts allowed by ONGC to refineries on supplies of crude oil. Total
deduction made by refineries on this account for the period from
IstApril, 2012 to 31st March, 2013 works out toRs. 15,846.70 million.
The same amount has been provided for in the accounts.

7.5 Recognition of revenue on account of Short Lifted Gas amounting
toRs. 571.42 million (Previous YearRs. 55.45 million) has been
postponed. This will be recognized when there is reasonable certainty
regarding ultimate collection as per the policy of the company.

7.6 Sales revenue of Natural Gas is based on producer price fixed by
Gol vide letter dated 31.05.2010 in respect of APM gas produced by
National Oil Companies (NOCs) at US$ 4.2/mmbtu inclusive of royalty
effective from 01.06.2010. For APM consumers, except for consumers in
North Eastern states, the consumer price is same as producer price,
i.e. US$ 4.2/mmbtu inclusive of royalty. For APM consumers in
North-East, consumer price is 60% of the producer price, i.e., US$
2.52/ mmbtu inclusive of royalty and the difference between producer
price and consumer price is paid to the company through Gol Budget up
to allocated quantity and shown as ''North-East Gas Subsidy''.

7.7 The company is supplying majority of Natural gas to GAIL (India)
Limited (GAIL) which also purchases gas from other sources and sells to
APM and non-APM consumers. Based on the Government directives, excess
in Gas Pool Account at the end of financial year is transferred to ONGC
I OIL in accordance with their contribution. Based on the details
received from GAIL, an amount ofRs. 3700.00 million for Gas Pool
Receipts for the current year,Rs. 339.23 million on account of interest
on Gas Pool Account and reversal ofRs. 441.50 million w.r.t. previous
year''s balance in Gas Pool Account, has been considered as ''Surplus
from Gas Pool Account'' as on 31 st March, 2013.

8.1 As per the Farm Out agreement dated 5th November, 2012 entered
into by the company with INPEX Offshore East India Ltd (INPEX), the
company has agreed to transfer 26% Participating Interest (PI) in Block
KG-DWN-2004/6 to INPEX for a consideration of USD 9.10 million (Rs.
494.95 million), with effect from IstApril, 2012. The approval of the
Government of India for the assignment of PI, which is a condition
precedent to the above agreement, has been received on 15th April, 2013
and accordingly, the consideration ofRs. 494.95 million has been
accounted under the head miscellaneous receipts.

9.1 The Government has revised the rate of Cess from Rs.2,500/MT to
Rs.4,500/MT w.e.f. 17.03.2012, resulting in the material increase in
the expenditure.

9.2 Excise duty on sale of product has been deducted from Sales
revenue and Excise duty shown above represents the difference between
excise duty on opening and closing stock of finished goods.

9.3.1 During the year, the Company has recognised additional liability
ofRs. 5,079.53 million towards revision in Long Service Rewards Scheme.
Further, in terms of DPE guidelines, the company has recognized
liability of Rs.18,504.79 million towards superannuation benefits to
employees. These have been allocated to activities as per the policy of
the company.

10.1 Brief Description: A general description of the type of Defined
Benefit Plans is as follows:

10.1.1 Earned Leave (EL) Benefit :-

Accrual - 30 days per year

Encashment while in service - 75% of Earned Leave balance subject to a
maximum of 90 days per calendar year Encashment on retirement - maximum
300 days

10.1.2 Good Health Reward (Half pay leave) :- Accrual - 20 days per
year Encashment while in service - Nil

Encashment on retirement - 50% of Half Pay Leave balance.

10.1.3 Gratuity:-

15 days salary for each completed year of service. Vesting period is 5
years and the payment is restricted toRs. 1.00 million.

10.1.4 Post-Retirement Medical Benefits :-

Upon payment of one time prescribed contribution by the employees, full
medical benefits on superannuation and on voluntary retirement subject
to the completion of minimum 20 years of service and 50 years of age.

10.1.5 Terminal Benefits:-

At the time of superannuation, employees are entitled to settle at a
place of their choice and they are eligible for Transfer Travelling
Allowance. Employees are gifted gold coins also, depending upon their
level and years of service.

10.4 The amounts included in the fair value of plan assets of gratuity
fund in respect of Reporting Enterprise''s own financial instruments and
any property occupied by, or other assets used by the reporting
enterprise areRs. Nil (Previous YearRs. Nil)

11 Disclosure under Accounting Standard -17 on "Segment Reporting"

The segment information is presented under the Notes to the
Consolidated Financial Statements as required under the standard.

12 Disclosure under Accounting Standard -18 on "Related Party
Disclosure":

12.1 Key Management Personnel:

Whole-time Functional Directors:

i) Shri Sudhir Vasudeva, Chairman and Managing Director

ii) Shri K.S. Jamestin

iii) Shri A. K. Banerjeefrom22.05.2012

iv) Shri P. K. Borthakurfrom 30.10.2012

v) Shri Shashi Shankerfrom 01.12.2012

vi) ShriN.K.VermafromOI.04.2013

vii) ShriS.V. Raoupto31.03.2013

viii) ShriU. N. Boseupto30.11.2012

ix) Shri A. K. Hazarikaupto30.09.2012

13 Disclosure under Accounting Standard -19 on ''Leases''

The company has certain office/residential premises on Operating Lease
which are cancellable by giving appropriate notice as per the
respective agreements. During the year Rs.914.03 million (Previous year
Rs.799.74 million) had been paid towards cancellable Operating Lease.

14.1.1 In respect of 16 NELP blocks (previous year 16) which have
expired as on 31 st March, 2013, the Company''s share of Unfinished
Minimum Work Programme (MWP) amounting to Rs. 19,560.95 million
(previous year to Rs.23,949.27 million) has not been provided for since
the company has already applied for further extension of period in
these blocks as ''excusable delay''/ special dispensations citing
technical complexities, within the extension policy of NELP Blocks,
which are under active consideration of Gol. The delays have occurred
generally on account of pending statutory clearances from various Govt,
authorities like Ministry of Defense, Ministry of Commerce,
environmental clearances, State Govt, permissions etc. The above MWP
amount of Rs. 19,560.95 million (previous yearRs. 23,949.27 million)
is included in MWP commitment under note no. 43.2.1.

14.1.2 As per the Production Sharing Contracts signed by the Company
with the Gol, the Company is required to complete Minimum Work
Programme (MWP) within stipulated time. In case of delay in completion
of the MWP, Liquidated Damages (LD) is payable for extension of time to
complete MWP. Further, in case the Company does not complete MWP or
surrender the block without completing the MWP, the estimated cost of
completing balance work programme is required to be paid to the Gol. LD
amounting toRs. 293.30 million (Previous yearRs. 870.42 million) and
cost of unfinished MWP Rs.217.14 million (Previous yearRs. 146.57
million) paid/payable to the Gol is included in survey and wells
written off expenditure.

15.1 The Company is engaged mainly in the business of oil and gas
exploration and production where each cost centre used for depreciation
(depletion) purposes is identified as independent Cash Generating Unit
(CGU) for assessing the impairment in Producing Properties and fixed
assets etc. on the basis of ''value in use''. The Company has tested all
its CGUs for impairment as on 31.03.2013 by applying discount rates of
20.10% (previous year 20.40%) for Rupee transactions and 14.00%
(previous year 13.67 %) for crude oil and value added products revenue
measured in USD as on 31.03.2013.

15.2 During the yearRs. 3,014.50 million (Previous YearRs. 932.83
million) is provided as impairment loss. Out of this an amount of Rs.
2,363.50 million (Previous Year nil) has been provided in respect of
Eastern Offshore Asset, Rajahmundry.Rs. 45.36 million (Previous YearRs.
83.30 million) has been provided as additional impairment in respect of
onshore CGUs - Jodhpur and Silchar and for offshore CGU- Ratna,Rs.
31.02 million (Previous YearRs. 75.83 million) and D18Rs. 6.98 million
(Previous Year nil) has been provided on account of increase in the
estimate of abandonment liability. In addition,Rs. 23.40 million
(Previous YearRs. 154.99 million) pertaining to block CY-OS-90/1 (PY-3)
has been provided as presently the field does not have any potential to
produce. An amount ofRs. 453.11 million (Previous YearRs. 540.14
million) mainly represents additional impairment charge in respect of
certain onshore Pre-NELP Joint Ventures (RJ ON 6 and CB ON 2) due to
adjustment of cost recovery from revenue and sharing of 100% royalty.
Balance amount ofRs. 91.12 million has been provided in Rajahmundry
onshore CGU for CWIP

Further,Rs. 756.47 million (Previous YearRs. 827.73 million) has been
reversed as impairment loss for Onshore CGU - Silchar and Jodhpur
during the year.

16 Other Disclosures under Schedule VI to the Companies Act, 1956:

16.1 Capital Commitments:

Estimated amount of contracts remaining to be executed on capital
account: -

i) In respect of Company-Rs.87,601.57 million (Previous yearRs.
114,069.33 million).

16.2.1 Estimated amount of Minimum Work Programme (MWP) committed under
various ''Production Sharing Contracts'' with Government of India/
Nominated Blocks:

i) In respect of Nominated Blocks Rs.958.54 million (Previous year
Rs.282.68 million).

ii) In respect of NELP blocks in which the Company has 100%
participating interest -Rs. 12,305.38 million (Previous year
Rs.15,052.01 million).

iii) In respect of NELP blocks in Joint Ventures, company''s share-
Rs.62,127.36 million (PreviousyearRs. 71,183.60 million).
16.2.2 The Board of directors has approved loan uptoRs. 50,000.00
million (Previous yearRs. 50,000.00 million) to Mangalore Refinery &
Petrochemicals Limited (MRPL), a subsidiary of the Company. Out of
whichRs. 33,000.00 million (previousyearRs. 26,000.00 million) has been
disbursed and Rs. 17,000.00 million (previous year Rs.24,000.00
million) can be availed by MRPL on or before 30th September, 2013.

16.2.3 The Company has given an undertaking to Power Finance
Corporation Limited (PFC), for an additional funding up toRs. 2,223.80
million (previousyearRs. 2,234.00 million) in respectof ONGC Tripura
Power Co. Limited (OTPC) for cost overrun, if any.

16.3.1 The above claims I demands are at various stages of appeal. In
the opinion of the management, these claims I demands are not tenable.

16.3.2 This includes an amount ofRs. 16,240.00 million towards infusion
of one time grant to Post Retirement Benefit Scheme for conversion of
defined benefitscheme to defined contribution scheme, pending approval
from MoP&NG.

17 Disclosure on Foreign currency exposures at year end that have not
been hedged by derivative instrument or otherwise:

The Company has receivables and payables in foreign currency as at the
balance sheet date. These foreign currency exposures are not hedged by
any derivative instruments or otherwise.

18 The Company has a system of physical verification of Inventory,
FixedAssets and Capital Stores in a phased manner to coverall items
over a period of three years. Adjustment of differences, if any, is
carried out on completion of reconciliation.

19 Some balances of Trade/Other Receivables, Trade/Other Payables and
Loans & Advances are subject to confirmation/ reconciliation.
Adjustments, if any, will be accounted for on confirmation/
reconciliation of the same, which will not have a material impact.

20 Previous year''s figures have been regrouped/ reclassified, wherever
necessary, to confirm to current year''s classification.

21 Figures in parenthesis as given in these Notes to Financial
Statement relate to previous year.

Mar 31, 2012

1. Corporate Information

Oil and Natural Gas Corporation Limited ('ONGC' or 'the Company') is a
public limited company domiciled in India and incorporated under the
provisions of Companies Act, 1956. Its Shares are listed and traded on
Stock exchanges in India. The Company is engaged in exploration,
development and production of Crude oil and natural gas.

Notes

1.1 Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of
Rs.5 Per share. Each holder of equity shares is entitled to one vote
per share. The company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.

1.2 Pursuant to the approval of the members dated 28.01.2011, during
the financial year 2010-11, one Equity share having face value of
Rs.10/- each had been sub-divided into two Equity Shares of Rs.5/- each
and bonus shares in proportion of one new Equity bonus Share of Rs.5/-
each held on 09.02.2011 (record date) had been allotted. Company has
issued total 4,277.75 million (Previous Year 4,277.75 million) Equity
shares of face value of Rs. 5 each issued as fully paid up by way of
bonus shares during the period of five years immediately preceding the
reporting date.

2.1 Represents assessed value of assets received as gift.

2.2 The Board of Directors has recommended a final dividend of Rs.2.00
per share which is subject to the approval of the shareholders in the
ensuing Annual General Meeting over and above the interim dividend of
Rs. 7.75 (Rs. 6.25 and Rs. 1.50) per share paid in two phases.

3.1 No amount is due for payment to investor education and protection
fund.

4.1 Plant & Machinery includes an amount of Rs. 8,159.95 million
(Previous Year Rs. 7,841.69 million) in respect of Capital Works in
Progress (CWIP) for C2-C3 plant which is mechanically complete and will
be capitalized on completion of test run which is pending due to non
receipt of approval for allocation of gas from Ministry of Petroleum
and Natural Gas (MoP & NG) for swap arrangement through GAIL.

5.1 During the financial year 2004-05, the company had acquired 90%
participating Interest in Exploration Block KG-DWN-98/2 from M/s Cairn
Energy India Ltd, for a lump sum consideration of Rs.3,711.22 million
which, together with subsequent exploratory drilling costs of wells had
been capitalized under Exploratory Wells in Progress. Initial-in-Place-
Reserves have been established in this block and a conceptual
development plan as part of the proposal for Declaration of
Commerciality had been submitted on 21.12.2009 for Southern Discovery
Area and on 15.07.2010 for Northern Discovery Area to Management
Committee (MC) for review. There is no significant change in the status
of this block during the current year. Pending final decision on the
DOC by the MC, as a matter of abundant caution, the Company has made a
provision of Rs. 9,412.09 million (including provisions created in
earlier years Rs. 9,401.34) towards exploratory wells which are more
than two years old from the date of completion of drilling.

5.2 As per the production sharing Contracts signed by the Company with
the Gol, the Company is required to complete Minimum Work Programme
(MWP) within stipulated time. In case of delay in completion of the
MWP, Liquidated Damages (LD) is payable for extension of time to
complete MWP. Further, in case the Company does not complete MWP or
surrender the block without completing the MWP, the estimated cost of
completing balance work programme is required to be paid to the Gol. LD
amounting to Rs. 870.42 million (previous Year Rs. 113.72 million) and
cost of unfinished MWP Rs. 146.57 million (Previous Year Rs. 919.81
million) paid / payable to the Gol is included in survey and wells
written off expenditure.

6.1 GBP one each, total value Rs. 6,885/-

6.2 Since the Bond is maturing in September 2012, the same has been
shown under Current Investment.

7.1 Loans and advances to employees include an amount of Rs.0.11
million (Previous Year Rs. 0.15 million) outstanding from whole time
directors.

7.2 In Ravva Joint Venture, the demand towards additional profit
petroleum raised by the Government of India (Gol), due to differences
in interpretation of the provisions of the production sharing contract
in respect of computation of post tax rate of return (PTRR), based on
the decision of the Malaysian High Court Setting aside an earlier
arbitral tribunal award in favour of operator, was disputed by the
operator M/s Cairn Energy India Pvt. Ltd. The Company is not a party to
the dispute but has agreed to abide by the decision applicable to the
operator. The Company had made a provision towards the claim made by
the Gol in earler years and the amount of provision outstanding as on
31st March, 2012 is Rs. 8,580.22 million (equivalent to USD 167.84
million) after adjustments for interst and exchange rate fluctuations.
The Gol had recovered the above amount [including interest there on USD
54.88 million (Rs. 2,829.86 million)] from the company in earlier years
which has been carried as recoverable under Long Term Loans and
advances in the Balance Sheet as at 31st March, 2012.

In subsequent legal proceedings, The Appellate Authority of the
Honourable Malaysian High Court of Kualal Lumpur had set aside the
decision of the Malaysian High Court and the earlier decision of
arbitral tribunal in favour of operator was restored, against which the
Gol has preferred an appeal before the Federal Court of Malaysia.
During the year, The Federal Court of Malaysia, vide its order dated
11th October, 2011, has dismissed the said appeal of the Gol.

The Company has taken up the matter regarding refund of the recoveries
made in view of the favourable judgment of the Federal Court of
Malaysia with MoP & NG. However, according to a communication dated
13th January, 2012 received, MoP & NG expressed the view that ONGC's
proposal would be examined when the issue of ONGC carried under Ravva
PSC is decided in its entirety by the Government along with other
partners.

In view of the perceived uncertainites in obtaining the refund at this
stage, the provision made in the books as above has been retained and
netted off against the amount recoverable as above in the financial
statements for the year ended 31st March, 2012.

7.3 The Finance (No.2) Act, 2009, has specified the definition of
"undertaking" for the purpose of claiming tax holiday under section
80-IB(9) of Income Tax Act, 1961 to be 'all blocks licensed under a
single contract' retrospectively whereas the company had earlier
considered each "Well" as an undertaking. Since the Amendment still
requires clairty on various issues and also considering the advice of
legal experts, the company continued to make provision for tax withour
considering the benefit under section 80-IB(9).

8. Deposit under Site Restoration Fund Scheme:

A sum of Rs. 91,825.72 million till 31.03.2012 (previous year Rs.
81,155.06 million) has been deposited with banks under Section 33ABA of
the Income Tax Act, 1961 and can be withdrawn only for the purposes
specified in the Scheme i.e towards removal of equipments and
installations in a manner agreed with Central Government pursuant to an
abandonment plan to prevent hazards to life, property, environment etc.
This amount is considered as restricted cash and hence not considered
as 'cash and cash equivalents'.

9.1 The deposits maintained by the company with banks comprise time
deposit, which can be withdrawn by the company at any point without
prior notice or penalty on the principal. Fixed deposits of Rs.
52,380.00 million (previous year Nil) have been pledged to Banks
against short term loan taken from Banks.

9.2 Amount deposited in unclaimed divided account is earmarked for
payment of dividend and cannot be used for any other purpose.

10.1 Loans and advances to employees include an amount of Rs. 0.24
million (previous Year Rs. 0.11 million) outstanding from whole time
directors.

10.2 During the financial year 2010-11, the Oil Marketing Companies,
nominees of the Gol recovered USD 32.07 million (Rs. 1,639.55 million),
ONGC's share as per directives of the Gol in respect of Jointly
Controlled Assets-Panna Mukta & Tapti. The recovery is towards certain
observations raised by auditors appointed by the Director General of
Hydrocarbons (DGH) under production Sharing Contract (PSC) for the
period 2002-03 to 2005-06 in respect of cost and profit petroleum share
payable to Gol. BGEPIL along with RIL ("Claimants") have served a
notice of arbitration on the Gol in respect of dispute, differences and
claims arisen in connection with the term of panna, Mukla and Tapti
PSC's. Since the company is not a party to the arbitration proceedings,
it had request MoP&NG that in case of an arbitral award, the same be
made applicable to ONGC also, as a constituent of contractor for both
the PSCs. Subsequently, vide letter dated july 4,2011 MoP&NG has
advised ONGC not to participate in the arbitration initiated by
RIL&BGEPIL under Panna, Mukta & Tapti PSCs. MoP&NG has also stated that
in case of an arbitral award, the same will be applicable to ONGC also
as a constituent of the contractor for both the PSCs. Pending final
arbitral award, the same has been shown as Receivable from the Gol
under 'Advance Recoverable in Cash or in Kind'.

11.1 New Crude Oil Sales Agreements (COSAs), with Bharat Petroleum
Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited
(HPCL), have been signed on 5th January, 2012 and 12th April, 2012
respectively. Since, the new COSA is made effective from 1st April,
2010, necessary adjustments amounting to Rs. 173.40 million considering
revised crude prices for supplies made to BPCL and HPCL Refineries
w.e.f 1st April, 2010 have been made in the accounts of 2011-12.

11.2 Sales revenue in respect of Crude Oil supplied to other refineries
(other than BPCL and HPCL) is eased on (he pricing formula agreed with
the refineries in items of eratwhile MoU. For crude oil produced in
Assam, sales revenue is based on the pricing formula provided by
MoP&NG. COSA with Indian Oil Corporation limited (IOCL) is under
finalizalion stage, with proposed effective dates of 11,April. 2010. As
IOC is making the payment as per initialed COSA, firs their provision
amount n g to Rs. 2,010.70 million (Previous Year Rs. 1,075.10 million) has
been made during the year Provision made till 31st March, 2012 is
Rs.3.065.BD million (Previous Year Rs. 1,075.10 million).

11.3 Sales revenue of Natural Gas is based on producer price feed by
the Col vide letter dated 31.05.2010 in re sped of ARM gas produced by
National Oil Companies (NOCs) at USS 4.2/mm Mu inclusive of royally
effective from 01.06.2010. For APM consumer, except for consumers in
North Eastern states, the consumer price is same as producer price,
i.e. US$ 4,21 mm be the Inside of royalty, For APM consumers in
North-East, consumer price is 60% of the producer price, i ,e,, US$
2,521 mmbtu inclusive of royalty and the difference between producer
price and consumer price is paid lo the company through UneGol Budget
and shown as'North-East Gas Subsidy'.

11.4 The company Is supplying majority of Natural gas to GAIL (India)
Limited which also purchases gas from other sources and sells to APM
and non-APM consumers. Based on the Government directives, excess in
Gas Pool Account at the end of financial year is transferred to
ONGC/Oil India Limited (OIL) In accordance with their contribution.
Based on the details received from GAIL, an amount off 1,946.33 million
(Previous Year Rs. 21,914.90 million) has been considered as 'Surplus
from Gas Pool Account.

11.5 In terms of the decision of Government of India (Gol), the company
has stared under-recoveries of Oil Marketing Companies (OMCs) on price
sensitive products viz Diesel, Domestic LPG and PDS Kerosene for the
year 2011-12 by extending the discount in the prices of Crude Oil,
Domestic LPG and POS Kerosene based on the rates of discount
communicated by Petroleum Planning and Analysis Cell (PPAC). Ministry
of Petroleum and Natural Gas (MoP&NG). The impact of discount is as
under:

12.1 Excise duty on sale of product has been deducted from Sales
revenue and Excise duty shown above represents the difference between
excise duty on opening and dosing stock of finished goods.

14.1 Brief Description: A general description of It type Of Defined
Benefit Plans is as follows:

15.1 A Earned Leave (EL) Benefit:-

Accrual - 30 day s per year

Encashment while in service - 75% of Earned Leave balance subject to a
maximum of 90 days per calendar year

Encashment on retirement- maximum 300days

16.1.2 Good Health Reward (Half pay leave)

Accrual - 20 days per year Encashment white in service - Nil

Encashment in retirement - 50% of Half Pay Leave balance.

16.1.3 Gratuity:-

15 days salary for every completed year of service. Vesting period is 5
years and Die payment is resented toRs.1.DO million.

16.1.4 Post Retirement Medical Benefits:-

Upon payment of one time prescribed contribution by the employees, lull
medical benefits on superannuation and on voluntary retirement subject
to the completion of minimum 20 yea re of service and 5G years of age.

16.1.5 terminal Benefits:-

At the time of superannuation, employees are entitled to settle at a
place of their choice and they am eligible for Transfer Travelling
Allowance, Employees are gifted a sliver plaque also, depending upon
their level.

The discount rate is based upon the market yield available on
Government bonds at the Accounting dale with a term that matches. The
salary growth rate takes account of inflation, seniority, promotional
other relevant factor on long term basis. Expected rate of return on
plan assets is based on market expectations, at the beginning of the
year, for return over the entire life of the related obligation.

17. Disclosure under Accounting Standard-16 on "Borrowing Costs"

The Company did not incur arty borrowing cost for any qtialifying
asset, No borrowing cost is capitalized during the year (previous year
Nil),

18. Disclosure under Accounting Standard -17 on " Segment Reporting"'

The segment information is presented under the Notes to the
Consolidated financial Statement as required under the standard.

19. Disclosure under Accounting Standard-18 on "Related Party
Disclosure"

The company has certain office / residential premises on Operating
Lease which are cancellable by giving appropriate notice as per the
respective agreements. During the year Rs. 799.74 million (Previous year
Rs.749.63 million) had been paid towards cancellable Operating Lease.

In respect of certain blocks., the Company's Joint Ventures (JV) with
certain corporate bodies have entered into Production Sharing Contacts
(PSCs) with the Gol, Details of these blocks and JVs as on 31.03-2012
are as under:

21.2.1 The financial statement of 128 (Previous Year 128) out of 139
(Previous Year 135) JV&NELP as per note no. 41.3 have been incorporated
in the accounts to the extent of company's participating interest in
assets, liabilities, Income, expenditure and profit/(loss) before tax
on the basis of statements certified in accordance with production
sharing contact and the same has been adjusted for changes as per Note
No. 2.1.1.

21.2.2 In respect of balance 11 (Previous Year 7) JVs/NELP assets,
liabilities, income and expenditure amounting to Rs. 1,026.31 Million
(Previous year Rs.47.51 Million), Rs.1,933.61 million (Previous Year Rs.
782.66 million), Rs. 370,31 million (Previous Year Rs. 55.28 million) and
Rs.2,053.41 million (Previous Year Rs. 943.31 million) respectively have
been incorporated on the basis of uncertified statements prepared under
the production sharing controls and the same has been adjusted for
changes as per Note No. 2.1.1.

21.2.3 The company has acquired 10% Participating interest (PI) of Caim
Energy India Limited (CEIL) in the Block KG DWN 98/2 on actual past
cost basis. Accordingly a Heads of Agreement (HOA) was signed between
ONGC & CEIL on 11.1.2012 for a provisional sum of Rs. 2,387.82 Million
(USD 46.71 Million) as consideration. The effective date of transfer of
PI shall be the date of Government approval, which is pending. Hence,
no adjustment is made in the accounts towards the same.

21.2.4 The company has acquired the Participating Interest (PI) of
British Gas Exploration & Production India Ltd (BGEPIL) In the
following blocks, effective from the following dates as approved by the
board of directors.

British Gas has agreed to pay a lump sum amount of USD 50 Million,
towards full and final settlement of carry costs/cash calls due in all
the above blocks, subject to government approval, which is pending.
Hence, no adjustment for this sum is made in the accounts towards the
lump sum amount due as above.

22 Disclosure under Accounting Standard -28 on ''Impairment of
Assets"

22.1 The Company is engaged mainly in the business of oil and gas
exploration and production where each cost centre used for depreciation
(depletion) purposes is identified as independent Cash Generating Unit
(CGU) for assessing the impairment in Producing Properties and fixed
assets etc. on the basis of 'value in use'. The Company has rested all
its CGUs for Impairment as on 31.03.2012 by applying discount rates of
20.40% (Previous Year 17.16 for Rupee transactions and Rs.13.67 %
(Previous Year 12.80 %) for crude oil and value added product's revenue
measured in USD as on 31.03.2012.

22.2 During the year Rs.932.83 million (Previous Year Rs.1534,73 million)
is provided as impairment loss. Out of this Rs.83.30 million (Previous
Year Rs.600.07 million) has been provided as additional impertinent in
respect of onshore CGUs - Jodhpur and Silchar for offshore CGU- Ratna,
Rs. 76.93 million (Previous Year nil) has been provided on account of
increase in the estimate of abandonment liability. In addition, Rs.
154.99 million (Previous Year nil) pertaining to block CY-OS-90/1
(PY-3) has been provided as presently the field has potential only to
produce for next two years and an amount of Rs. 76.57 million (Previous
Year nil) has been provided in respect of Tatipaka mini Refinery,
Rajahmundry. Balance amount of Rs. 540.14 million (Previous Year Rs.
934.66 million) mainly represents additional impairment charge in
respect of certain onshore NELP blocks due to adjustment of cost
recovery from revenue and sharing of 100% royalty.

Further, Rs. 827.73 million (Previous Year Rs. 192.53 million) has been
reversed as impairment loss during the year. Out of this, an amount of
Rs.791.25 million (Previous Year nil) has been reversed for offshore-
Krishna Godavari CGU, Rajahmundry due to better economic performance of
the asset based on the future production profile. Balance amount
reversed is attributable to Jodhpur and Silchar onshore due to transfer
of assets to another CGU and change in estimation of abandonment
liability in respect of offshore.

23 Other Disclosures under Schedule VI to the Companies Act, 1956:

23.1 Capital Commitments:

Estimated amount of contacts regaining to be executed on capital
account;-

i) In respect of Company- Rs. 114,069.33 million (Previous Year
Rs.164,076.06 million).

23.2.2 Board has approved the loan up to Rs. 50,000,00 million (Previous
Year Nil) lo MRPL, a subsidiary of the Company, Out of whichRs.
26,000.00 million has been disbursed and Rs. 24,000.00 million ca n be
availed by MRPL up to 31st December, 2012.

23.2.3 The Company has given an undertaking to Power Finance
Corporation (PFC), for an additional funding up to Rs.2,234.00 million
(Previous Year Rs.2.234.00 million) m respect of ONGC Tripura Power Co.
Limited (OTPC) For cost overrun, if any.

The above claims I demands are at various stages of appeal and in the
opinion of the Company, the same are not tenable.

23.4 Corporate Guarantees executed by the Company on behalf of its
wholly owned subsidiary, ONGC Videsh United (OVLJ and ONGC Nile Ganga
BV (wholly owned subsidiary of OVL):

23.4.1 Guarantees executed for financial obligations:

i) Amount of GuaranteeRs. 42,372.45 million (Previous year Rs.38,371.66
million).

23.6 Uncalled liability On parity paid shares is Rs.1,337.19 million
(Previous Year Rs. 1,337.19 million) against Which advance paid
Rs.1,233.87 million (Previous Year Rs. 1,233.87 million].

Notes;

1. Production includes internal consumption and intermediary losses.

2. Production of 1,013 MT (Previous year 203,799 MT) Crude Oil and
15,175 TM1 (Previous year 17,059 TM1) of Natural Gas is induced which
is the difference between participating interest and entitlement
interest in respect of CB-ON/3, CB-QN/2 and RJ-0N/6JVs.

3. Crude oil production includes condensate of 1.952 MMT (Previous
Year 2.042 MMT).

Notes:

1. Loan to QVL is repayable within a notice period of minimum one year
and carries no interest during the year 2010-11 and 2011-12.

2. Loan to MRPL comprises two loans: First loan carries interest @ 7%
per annum and is repayable at quarterly intervals.

Second loan carries interest @ SBI Prime Lending Rate (SBAR) with a
spread of minus 385 basis points. Repayment of the loan will start in
2& equal installments starting from 31.03.3014. QNGC can call these
loans on notice of 90 days, MRPL can also prepay whole or part of the
loan to ON GC as per its requirement.

3 The Company has not advanced any money to its employees for the
purposes of investment in the securities of the Company.

24. Pursuant to the finalization of the agreement between ONGC, Claims
Energy Pic, Vedanta Resources Pic and their associates during the year,
the royalty paid by ONGC in respect of RJ-QN-9Q/1 Block has been
treated as contact cost eligible for cost recovery. As a result, an
income of Rs.31,405 47 million received from M-s Claim India Ltd.
towards Royalty paid for the period August 200$ to September 2011 has
been disclosed as an exceptional item.

25. The Company has a system of physical verification of Inventory,
Fixed Assets and Capital Stores in a phased manner to cover all items
over a period of three years. Adjustment of differences, if any. is
earned out on completion of reconciliation.

26. Some balances of Trade/Other Receivables, Trade/Other Payables and
Loans A Advances are subject to confirmation/ reconciliation.
Adjustments if any, will be accounted for on confirmation.'
reconciliation of the same, which will not have a material impact.

27. Previous year's figures have been regrouped/ reclassified, as
required under Revised Schedule-Vi to the Companies Act, 1956 wherever
necessary, to confirm to current year's classification.

28. figures in parenthesis as given in these Notes to Financial
Statement relate to previous year.

Mar 31, 2010

1. In terms of the decision of Government of India (Gol), the Company
has shared under-recoveries of Oil Marketing Companies (OMCs) for the
year 2009-10 by allowing discount in the prices of Crude Oil, PDS
Kerosene and domestic LPG based on provisional rates of discount
communicated by Petroleum Planning and Analysis Cell, Ministry of
Petroleum & Natural Gas (MoP&NG). The Company does not foresee any
material impact on finalization of discount rates.

2.1 Sales revenue in respect of Crude Oil is based on the pricing
formula agreed with the customers for the period from 01.04.2002 to
31.03.2004. Pending finalization of fresh Memorandum of Understanding
(MOU)/Crude Oil Sale Agreement (COSA) with the customers, the same
pricing formula has been provisionally adopted from 01.04.2004 onwards.
However, for Crude Oil produced in Assam, benchmark price revised by
MoP&NG w.e.f. 01.04.2008 has been adopted.

2.2 Sales revenue in respect of Natural Gas under Administered Price
Mechanism (APM) is based on the gas prices fixed on provisional basis
as per directives dated 20.06.2005 and 05.06.2006 of the Gol, MoP&NG.

2.3 Adjustments, if any, on account of Para 2.1 and 2.2 above shall be
carried out on finalization of agreements/ receipt of government
directives. However, the Company does not foresee any material impact
on current years results.

3. MoP&NG vide letters dated 15.03.10 and 09.04.10 have directed GAIL
(India) Limited (GAIL) that difference between consumer price and
producer price revised vide MoP&NG letter dated 5th June, 2006 for APM
gas being supplied to City Gas Distribution Projects and small
consumers having allocations up to 0.05 MMSCMD should be transferred by
GAIL from surplus in Gas Pool Account to the producers. Accordingly, an
amount ofRs. 4,415.79 million on account of above for the period from
06.06.06 to 31.03.10 has been recognised during the current year.

4. The MOU for trading in products of Mangalore Refinery and
Petrochemicals Limited (MRPL), a subsidiary of the Company, expired on
31st March, 2009, and accordingly no trading activity of their products
was carried out during the year. Sales revenue and Purchases on account
of trading of such products in the previous year was Rs. 85,098.15
million and Rs. 85,073.62 million respectively.

5.1 During the year, the Company has changed its accounting policy on
abandonment cost and started providing the full eventual estimated
liability towards costs relating to dismantling, abandoning and
restoring of onshore well sites. Such cost of onshore well site has
been capitalized to Producing Property/Development Wells in Progress
/Exploratory Wells in Progress when completed and in case of dry wells
it is charged to Profit & Loss account. This has resulted in increase
in Producing Property by Rs. 8,353.36 million, Exploratory Wells in
Progress by Rs. 166.64 million and Development Wells in Progress by Rs.
102.57 million with corresponding increase in abandonment liability by
Rs. 8,622.57 million. This has also resulted in increase in Depletion
cost by Rs. 403.72 million and cost of dry wells by Rs. 88.50 million
with corresponding decrease in profit before tax by Rs. 492.22 million.

5.2 Further, in case of offshore wells, upto the previous year the
Company was providing full eventual estimated liability towards costs
relating to dismantling, abandoning and restoring of offshore
wells/facilities that were forming part of producing properties.
However, during the current year, the Company started providing such
liability in respect of wells completed and facilities capitalized also
whether they are transferred to Producing Property or not. This has
resulted in increase in Development Wells in Progress by Rs. 305.52
million and corresponding increase in abandonment liability by a
similar amount. This has no impact on profit before tax.

6. During the year, the Company changed its accounting policy of
amortising intangible assets from Written Down Value Method @ 40% to
Straight Line Method over the useful life not exceeding a period of 5
years in order to systematically amortize its intangible assets. This
has resulted in decrease in Depreciation, Depletion, Amortisation and
Impairment by Rs. 424.55 million, consequently activity cost decreased
by Rs. 3.22 million and Profit before tax increased by Rs. 421.33
million.

7. In Ravva Joint Venture, the demand towards additional profit
petroleum raised by Gol, based on the decision of the Malaysian High
Court, was disputed by the Operator M/s. Cairn Energy India Limited,
due to difference in interpretation of provision of Production Sharing
Contract (PSC) in respect of computation of Post Tax Rate of Return
(PTRR). The Company is not a party to the dispute but agreed to abide
by the decision applicable to the Operator. As the dispute between the
Operator and Gol was not resolved, the Company made a provision in
Financial Year 2008-09 amounting to Rs. 5,771.14 million (USD 113.82
million) on account of additional profit petroleum and Rs. 2,829.86
million (USD 54.88 million) towards interest thereon totaling to Rs.
8,601.00 million (USD 168.70 million) as an abundant precaution. Gol
has recovered such amount subsequently.

The appellate authority of Honorable Malaysian High Court of Kuala
Lumpur, Malaysia has set aside the decision of the Malaysian High Court
and the decision of arbitral tribunal in favour of Operator was
restored on 15th September 2009, Gol has filed an appeal in the Federal
Court of Malaysia against such restoration.

An additional interest of Rs. 65.41 million (USD 1.45 million) has been
provided during the year. Pending final outcome of this appeal, the
provision is retained at Rs. 7,679.21 million (USD 170.15 million) net
of reversal of Rs. 987.20 million towards exchange gain during the
year.

8. The Company acquired 90% Participating Interest in Exploration
Block KG-DWN-98/2 from M/s Cairn Energy India Ltd. in 2004-05 for a
lump sum consideration ofRs. 3,711.22 million which was capitalized
under Exploratory Wells in Progress as per Accounting Policy No. 6.3.
Subsequent exploratory drilling costs of wells in this block were
capitalized as Exploratory Wells in Progress. Initial-in-Place-Reserves
have been established in this block and a conceptual development plan
is also under preparation. This being deep water block, needs more time
for completion of appraisal programme. However, the Company as an
abundant precaution made a provision ofRs. 6,104.80 million and Rs.
2,360.39 million in respect of above costs in 2007-08 and 2008-09
respectively. Since there is no significant change in status of this
block during the current year, the expenditure amounting to Rs. 918.48
million on the wells completed upto 31 st March 2008, being more than
two years old is provided for in the current year.

9. As perthe Production Sharing Contracts signed by the Company with
the Gol, the Company is required to complete Minimum Work Programme
(MWP) within stipulated time. In case of delay in completion of the
MWP, Liquidated Damages (LD) is payable for extension of time to
complete MWP. Further, in case the Company does not complete MWP or
surrender the block without completing the MWP, the estimated cost of
completing balance work programme is required to be paid to the Gol. LD
amounting to Rs. (-)78.41 million net of reversal (Previous year Rs.
563.28 million) and cost of unfinished MWP Rs. 3,148.58 million
(Previous year Rs. 1,439.51 million) paid/payable to the Gol is
included in survey and wells written off expenditure in Schedule 21.

10. In respect of 16 (Previous year 16) Deepwater NELP Blocks,
companys share in LD and MWP amounting to Rs. 12,037.37 million
(Previous year Rs. 6,229.03 million) and Rs. 33,024.85 million
(Previous year Rs. 13,075.42 million) respectively has not been
provided for, since the rig moratorium proposal is under consideration
of Gol as per the letter dated 18.08.2008 from Director General of
Hydrocarbons (DGH). Out of the above, MWP amounting to Rs. 1,770.62
million (Previous year Nil) has already been completed during the year
and balance amounting to Rs. 31,254.23 million (Previous yearRs.
13,075.42 million) is included in Capital Commitment (Note No 27.1.2).

11. The Finance (No. 2) Act, 2009 has specified the definition of
"undertaking" for the purpose of claiming tax holiday under section
80-IB(9) of Income Tax Act, 1961 to be all blocks licensed under a
single contract retrospectively whereas the company had earlier
considered each well as an "undertaking".Since the amendment still
requires clarity on various issues and also considering the advice of
legal experts, the company continued to make provision for tax without
considering the benefit u/s80-IB(9).

12. The Jharia CBM Block was awarded by Gol to ONGC-CIL consortium on
nomination basis for exploration and exploitation of Coal Bed Methane
(CBM) gas. Ministry of Coal (MoC) later awarded a coal mining block to
the private company which overlapped with a part of the Companys CBM
Block. It was decided by the MoC and MoP&NG that such area of
exploratory wells drilled by the Company are excluded from the mining
area to the private company. These well sites are permanently acquired
by the Company and the titles are in the name of the Company. Pending
resolution and receipt of equitable land for future exploration
activities in consideration of the overlapped area, amounting toRs.
1.54 million incurred on exploratory wells is shown under Exploratory
Wells in Progress.

13. In case of Jointly Controlled Assets - Panna Mukta & Tapti (ONGC
Share - 40%), where Blocks auditors have opined regarding non
ascertainment and adjustment of certain observations raised by auditors
appointed by Director General Hydrocarbon (DGH) under Production
Sharing Contract for the period 1994 to 2007 in respect of cost and
profit petroleum share. Pending resolution of such issues, no
adjustment has been made in the accounts of the operator. The amount of
liability arising out of such observations has not been quantified and
impact of the same on Companys accounts is unascertainable.

14. Pending finalization, the Company provided liability for pay
revision in respect of unionized category of employees amounting to Rs.
1,910.00 million during the year (till 31.03.2010 Rs. 4,100.00 million)
and is allocated to activities as per the policy of the company.

15. The Company changed the rate of depreciation on all Trunk
Pipelines and Onshore Flow Lines (assets below ground) from 27.82% to
100% based on technical assessment by the management during 2005-06.
The Company made a reference to the Ministry of Corporate Affairs (MCA)
during 2006-07 for confirmation of the rate of depreciation. Pending
confirmation by the MCA, Company continues to charge depreciation at
100% on such assets.

16. The Company has a system of physical verification of Inventory,
Fixed Assets and Capital Stores in a phased manner at regular
intervals. Adjustment of differences, if any, will be accounted for
after examination of these differences.

17. Some balances of Debtors, Creditors and Loans & Advances are
subject to confirmation/ reconciliation. Adjustments, if any, will be
accounted for on receipt/confirmation of the same after examination.

18. Disclosure under the Revised Accounting Standard -15 on "Employee
Benefits" 19.1 Brief Description: Ageneral description of the type of
Defined Benefit Plans is as follows:

19.1.1 Earned Leave (EL) Benefit

Accrual - 30 days per year

Encashment while in service - 75% of Earned Leave balance subject to a
maximum of 90 days per calendaryear

Encashment on retirement - maximum 300 days

19.1.2 Good Health Reward (Half pay leave) Accrual - 20 days per year
Encashment while in service - Nil

Encashment on retirement - 50% of Half Pay Leave balance.

19.1.3 Gratuity

15 days salary for every completed year of service. Vesting period is 5
years and the payment is restricted to Rs. 1.00 million.

19.1.4 Post Retirement Medical Benefits -

Upon payment of one time prescribed contribution by the employees, full
medical benefits on superannuation and on voluntary retirement subject
to the completion of minimum 20 years of service and 50 years of age.

19.1.5 Terminal Benefits

At the time of superannuation, employees are entitled to settle at a
place of their choice and they are eligible for Transfer Traveling
Allowance. Employees are gifted a silver plaque also, depending upon
their level.

20. Disclosure under Accounting Standard -16 on "Borrowing Costs"

The Company did not incur any borrowing cost for any qualifying asset.
No borrowing cost is capitalised during the year (previous year Nil).

21. Disclosure under Accounting Standard -17 on "Segment Reporting"

The segment information is presented under the notes to accounts of the
Consolidated Financial Statements as required under the standard.

22. Disclosure under Accounting Standard -18 on "Related Party
Disclosure"

22.1 Name of related parties and description of relationship:

22.1.1 Joint Ventures/Jointly Controlled Entities

Sl. No Name Relationship

i) Ravva Joint Venture

ii) CY-OS-90/1(PY3) Joint Venture

iii) Panna.Mukta&Tapti Joint Venture

iv) CB-OS-1 Joint Venture

v) CB-OS-2 Joint Venture

vi) GK-OSJ-3 Joint Venture

vii) RJ-ON-90/1 Joint Venture

viii) RJ-ONN-2003/1 JointVenture

ix) KK-DWN-2004/1 JointVenture

x) ONGCMangalore Petrochemicals
Limited Joint Controlled Entity

xi) Petronet LNG Limited Joint Controlled Entity

xii) ONGC Teri Biotech Limited Joint Controlled Entity

xiii) Mangalore SEZ Limited Joint Controlled Entity

xiv) ONGC Petro Additions
Limited Joint Controlled Entity

xv) ONGC Tripura Power Co.
Limited Joint Controlled Entity

xvi)Dahej SEZ Limited Joint Controlled Entity

22.1.2 Key Management Personnel:

Whole-time Functional Directors:

i) Shri R.S. Sharma, Chairman and Managing Director

ii) Dr.A.K.Balyan

iii) ShriA.K. Hazarika

iv) Shri U. N. Bose

v) Shri D.K. Pande

vi) Shri D.K.Sarraf

vii) Shri SudhirVasudeva .

23.1.1 The financial statements of 117 (Previous year 93) out of 124
(Previous year 112) JVs/NELP as per para no. 24.3 have been
incorporated in the accounts to the extent of Companys participating
interest in assets, liabilities, income, expenditure and profit/(loss)
before tax on the basis of statements certified in accordance with
production sharing contract and the same has been adjusted for changes
as per accounting policy No. 9.1 in Schedule-26.

23.1.2 In respect of balance 7 (Previous year 19) JVs/NELP assets,
liabilities, income and expenditure amounting to Rs. 69.80 million
(Previous yearRs. 32.93 million), Rs. 143.98 million (Previous yearRs.
921.25 million), Rs. 152.55 million (Previous yearRs. 0.06 million) and
Rs. 812.85 million (Previous year Rs. 478.69 million) respectively have
been incorporated on the basis of uncertified statements prepared under
the production sharing contracts and the same has been adjusted for
changes as per accounting policy No. 9.1 in Schedule-26.

24. In respect of Farm Out agreements, where necessary approval from
Central Government has been obtained during the year, a sum ofRs.
1,196.19 million (Previous year Rs. 4,979.55 million) has been
considered recoverable from the farmers towards the share of
expenditure incurred from the effective date of the farm out agreement
and has been credited to Miscellaneous Receipts amounting to Rs.
1,049.66 million (Previous year Rs. 4,976.82 million) in respect of
earlier years and the balance current year expenditure has been
credited to respective natural heads.

24.1. The Company has given an undertaking to Power Finance
Corporation (PFC), for an additional funding up to Rs. 2,234.00 million
in respect of ONGCTripura Power Co. Limited (OTPC)for cost overrun, if
any.

25.1 The Company is engaged mainly in the business of oil and gas
exploration and production where each cost centre used for depreciation
(depletion) purposes is identified as independent Cash Generating Unit
(CGU) for assessing the impairment in Producing Properties and fixed
assets etc. on the basis ofvalue in use. The Company has tested all
its CGUs for impairment as on 31.03.2010 by applying discount rates of
17.31% (Previous year 16.61 %) for Rupee transactions and 13.07 %
(Previous year 13.40 %) for crude oil and value added products revenue
measured in USD as on 31.03.2010.

25.2 During the year X 553.45 million (Previous year Rs. 1,240.59
million) was provided as an additional impairment loss in respect of
certain CGUs. Further, impairment loss to the extent of Rs. 986.17
million (Previous year Rs. 4,350.91 million) has been reversed in
respect of DVP Jorhat and Ratna CGUs due to increased sale price and
accretion in reserves.

26 Disclosures under Schedule VI to the Companies Act, 1956:

26.1 Capital Commitment not provided for:

26.1.1 Estimated amount of contracts remaining to be executed on
capital account:-

iii) Out of total Bank Guarantees of ONGC an amount of Rs. 7,044.00
million (Previous year Rs. 4,544.32 million) has been provided in
respect of MWP committed under various Production Sharing Contracts
with Government of India and Nominated Blocks which is also included in
Capital Commitments under para 27.1.2.